SNP plans to keep the pound in the event of Scottish independence have been dealt a blow, with a Treasury report set to indicate that a currency union could lead to the end of Scottish banknotes.
The Scottish government has proposed plans to retain the pound as part of a “sterling zone” with the rest of Britain if Scotland votes in favour of independence. But the Treasury will claim that Scottish independence would “fundamentally transform” the Bank of England’s role in Scotland.
Experts have warned that the Scottish government would need to reach an agreement over Scottish banks rights to issue their own notes. If such an agreement wasn’t reached, it could lead to Scottish notes losing their value, or being rejected altogether, elsewhere in the U.K.
However the SNP have maintained that there is no threat to their plans to keep the pound, dismissing dears that it would affect the situation with Scottish banknotes as “scaremongering”.
A spokesperson said ““The existing situation relating to Scottish banknotes will remain in place within a post-independence currency union.”
SNP MP Stewart Hosie this morning hit back at claims that the value of Scottish notes might be affected, telling the BBC “Every single Scottish note in circulation is fully covered by assets held by the Bank of England, which guarantees its value. That wouldn’t change under independence.”
The debate comes after Alistair Darling, head of the Better Together campaign, voiced his concerns about SNP plans to the Scottish Labour conference at the weekend. Adressing the conference in Inverness, Mr Darling said that nationalist arguments for currency “fall apart” when questioned, claiming that the government was being “evasive” over the issue.
He said “In the last 12 months alone, they have gone from being in favour of the euro to using the pound, to now saying they will have a currency union. In order to keep the pound, the nationalists now say we would have to enter in to a currency union. Yesterday Nicola Sturgeon was saying that of course within a currency union you could do what you want, there would be no constraints, you could spend money on what you want. That is utter nonsense.”
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